The big news of the most recent World Agricultural Supply and Demand Estimates (WASDE) report involved the changes to the corn projections. Though the report’s estimated corn production rate for the 2013/2014 crop is up from the previous estimate, the number was still down from prereport trade averages.
“A post-Thanksgiving rally is expected for product and cash cattle values,” said Andrew Gottschalk of Hedgers Edge. That might not be a good thing in the long run, however, as cash prices and their influencing market elements—such as production rates, feeder prices and futures—threaten to push prices out of consumers’ willingness to pay.
The RPI—a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry— stood at 100.2 in September, down 0.3 percent from a level of 100.5 in August. Despite the recent declines, the RPI remained above 100 for the seventh consecutive month, which signifies expansion in the index of key industry indicators.
Cash fed cattle trade again returned to the “leave it ‘til Friday” approach last week. Analyst expectations were mixed on if the week’s trade would be steady/higher, steady/lower, or just plain steady.
Drought has caused many cow herds to be culled extensively over the last two years. However, some culling of beef cows occurs in most herds every year. A few cows will become reproductively unsound, brokenmouths, bad udders, open, and/or just plain old.
After more than two weeks delayed, the September/October Cattle on Feed (COF) report was released to little fanfare. The results were called neutral though analysts predict it bodes well—or badly, depending on your perspective—for months to come. Tight supplies of cattle are coming.
“It was a fast track in the country with South Plains trade at $132-133 while the Corn Belt traded at $132-134 live and a full range of $206-210 on a dressed basis,” reported Andrew Gottschalk of Hedgers Edge Thursday, noting that the bulk of the Corn Belt dressed trade was in the $208-209 area.
U.S. beef exports to South America are up sharply in recent years, and Peru is one of the main drivers of this phenomenal growth. Now residents in this nation of 30 million have mouthwatering images of one of their favorite dishes—made with high quality, grain-fed U.
Last Thursday came with word that the government was back up and running. Politics and speculations of the future aside, this was a welcomed change from the market point of view. Finally there are official numbers on cattle sales and beef prices! However, the market party can’t start just yet.
The other big things going on in the country—changes to taxes and healthcare laws, the market swings and considerable uncertainty with the government—have convinced many wealthy buyers that now is the right time to realize their dream of owning a piece of America’s premiere mountain landscape.
The continued government shutdown has lent more speculation to the cash markets. Asking prices, bids, and the fact it was another week of Friday trade were all easy to track. But expectations of where that Friday trade would eventually come in was all over the map, from “up” to “down” to “steady” predictions.
The lack of federal government data collection has already impacted livestock markets. The impacts will grow exponentially if the situation persists for many more days. The most significant initial impacts are on business arrangements that base beef and cattle transactions on USDA price reports.
The ingredients for the best winter wheat grazing opportunity in several years seem to be coming together this fall. Most all of Oklahoma has received significant rain in the past two weeks. The rain is sufficient, in most cases, to get wheat planted and up.
The most recent Cattle on Feed report again had bullish surprises in the placements area. Analysts expected placements to be down, but what actually happened was a shock. Placement numbers inspire questions; are cattle being held back or do they exist at all?.
The trend of a Friday trade continued last week; Packers might have done themselves a disservice in waiting as futures did nothing but strengthen throughout the week and they were said to have had short supplies of contract cattle around them. Analysts expected trade to take place late Friday at higher money compared to the prior week.
Yet another week of “wait- ‘til-Friday” trade in the cash fed cattle markets. With larger show lists, a number of outside influences on the market, and the expectation of a late Friday-afternoon Cattle on Feed report, the theme was one of biding time..
Production estimates were upped for both this year and next on increased bull and cow slaughter throughout this year. Estimates of 25.68 billon pounds (bp) of beef were set for 2013 and 24.23 bp for 2014. These are both below the production of 2012, but up from earlier expectations this year.
Cash corn prices in the Texas Panhandle have decreased $2.00/bushel since July. While there is still some uncertainty about how big the new corn crop will be and just how low corn prices might go, there is no doubt that significantly lower corn prices will have a big impact on feeder price levels and feeder price relationships.
Bids were slow to develop and were passed over out of hand by cattle feeders offering cattle at $3-5 above the Spartan bids. That said, analysts expected trade would develop at slightly depressed prices from the prior week of $123 live in the South Plains, and $194-195 dressed in the Corn Belt.